Voltas shares fall 4% on Q1 earnings, what should investors do?

Shares of Voltas fell over 4% today after the Tata Group firm reported a decline of 10.47 per cent in net profit for the first quarter ended June 30, 2022. Voltas stock fell 4.16 per cent to Rs 958 against the previous close of Rs 999.60 on BSE.

Voltas shares are trading lower than 5-day, 20-day, 50-day, 100-day and 200-day moving averages.

The stock opened 2.96 per cent lower at Rs 958 on BSE.

The large cap stock has lost 5.29 per cent in a year and fallen 19.57 per cent in 2022.

Total 1.01 lakh shares of the firm changed hands amounting to a turnover of Rs 9.88 crore on BSE. The market cap of the firm fell to Rs 32,448 crore on BSE.

 At 2:50 pm, the stock was trading 1.81 per cent lower at Rs 981.50.

The stock hit a 52-week high of Rs 1,356.90 on October 19, 2021 and a 52-week low of Rs 923.50 on May 16, 2022.

Voltas reported consolidated net profit of Rs 109.62 crore in the first quarter ended June 30, 2022 against a consolidated net profit of Rs 122.44 crore in the April-June quarter last fiscal.

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However, revenue from operations rose 55.05 per cent to Rs 2,768 crore during the period under review as against Rs 1,785.20 crore in the corresponding period of the previous fiscal.

Operating profit excluding other income gained 28.88% to Rs 174.99 crore in Q1 against Rs 135.78 crore operating profit in the June quarter of the previous fiscal.

Total expenses rose 56.69 per cent to Rs 2,603.48 crore in the first quarter of FY23 as against Rs 1,661.53 crore a year ago.

Net profit fell 40.41% on a quarter-on-quarter basis from Rs 182.70 crore in the March 2022 quarter. Revenue climbed 3% on a sequential basis from Rs 2,666.58 crore in Q1.

Here's a look at what brokergae said on the prospects of the stock.

Morgan Stanley is overweight on the stock with a target price of Rs 1,160. "In Q1, AC margins and project business disappointed, Q1 revenue/EBITDA/adjusted PAT growth of 55%/30%/-10%,(-3%/-34%/-41% vs. estimates). Gross and EBITDA margins shrinked 730 bps and 120 bps, respectively.  AC market share in June stood at 24.1% against March 22  market share of 19.5%," the brokerage said.

CLSA has assigned a sell call to the stock with a target price of Rs 930. "The firm has regained Q1 market share at cost of margins. Q1 below estimates on weak margins, while revenue growth of 55% YoY (3-yr CAGR: 1%) largely in-line. Gross & EBITDA margins fell sharply YoY & QoQ, reflecting heightened competitive intensity and cost pressure," the brokeage said.